That net profit result is after $US195.8 million in adjustments for asbestos liabilities that are included in its annual accounts, up from $US117.1 million last year.

James Hardie has an obligation to put up to 35 per cent of its operating cash flow into the Asbestos Injuries Compensation Fund, which provides payouts to Australian victims of asbestos-related diseases.

Under the deal, each year an independent actuarial report is required to estimate the likely amount of asbestos liabilities for James Hardie, its related entities and former businesses which are covered by the compensation fund.

KPMG's current estimate of total Australian asbestos liabilities that would need to be met by the AICF is $1.87 billion, after accounting for insurance recoveries.

That estimate is up almost $177 million since last year, due mostly to a change in assumptions about when asbestos-related diseases would peak.

KPMG says, without changes to its assumptions, the estimated liability would have been $1.57 billion - a fall from the previous year, largely due to expected claims being made and paid out.

Mesothelioma on the rise

The main reason for the rise in liability, according to the report, is a continued increase in claims by asbestos victims suffering mesothelioma, a rare form of cancer generally affecting the lungs and typically caused by asbestos exposure.

KPMG is budgeting $96 million for extra claims over the next three years and $168 million more over the period from 2017-18 to 2025-26.

James Hardie says actuaries had previously assumed a peak in mesothelioma claims to have occurred in 2010-11, however the past two years of claims have been above expectations.

In the year to March 31, a total of 608 asbestos-related claims were received, a 12 per cent rise from 542 claims the previous year, and well above expectations of 540 claims.

James Hardie says 604 claims were settled in its 2014 financial year, with an average settlement of $253,000, resulting in a total payout of $140.4 million for the year.

Mesothelioma claims jumped almost 20 per cent in the year to March 31 2014, to 370, up from 309 the year before, 259 in 2011-12 and 268 in 2010-11.

KPMG had previously expected only 300 mesothelioma claims in its forecasts for 2013-14.

The actuaries says it is too early to tell whether the higher number of claims will be sustained based on one year's worth of increased claims.

Peak in disease may be decades off

However, the president of the Asbestos Diseases Foundation of Australia, Barry Robson, says his organisation, and others representing victims, believe the peak in cases may still be decades away.

"The increase is in the second wave with people that have done home renovations, and we're seeing younger people and women are now presenting," he told ABC News Online.

Mr Robson says people as young as in their 40s are presenting with this rare form of cancer, and more cases are also being picked up by doctors, who are now better informed about the symptoms of asbestos-related illnesses.

"Better experts than I am are now looking at 2035 as a possible peak," he said.

"As doctors become more and more aware of what an asbestos disease looks like in their patients, then more and more people will be registered with an asbestos-related disease."

The worse financial news for James Hardie is that mesothelioma claims are far more expensive for the company, with the average settlement sitting at $308,000, compared to around $100,000 for asbestosis or lung cancer.

There were also seven "large" mesothelioma claims above $1 million over the past year, worth a total of $11.6 million - no other forms of asbestos-related disease carried such large payouts.

Mr Robson says the size of asbestos-disease payouts is determined by the courts or in settlement negotiations with reference to many factors, including age, occupation and the number of dependents the victim has.

"Take the case of a lawyer, who I know got over a million dollars, he had a very young daughter - I think at the time of his death she was around six years of age," Mr Robson said.

"He contracted mesothelioma when he was working his way through uni, he was working on building sites, so while he was going to law school he was exposed and then later on he died from meso."

Is the fund adequately funded?

The company warns that, if claims do not start reducing until after 2018-19 the estimated claims total could rise a further 22 per cent on top of this financial year's increase.

KPMG's high scenario puts the liability for future claims at almost $3 billion, versus the central estimate of $1.87 billion.

James Hardie's chief financial officer Matt Marsh says the impact on the company's bottom line will be capped, and it is fulfilling all its requirements to the asbestos compensation fund.

"We'll make a payment in July of $US113 million and that will be in compliance with our obligation under the [agreement] to contribute up to 35 per cent of our operating cash flow," he told analysts on an investor briefing.

"The second part of that question is will that be enough to pay for the liabilities, and that's a question that's better asked of the AICF [Asbestos Injuries Compensation Fund]."

Unfortunately, when the ABC rang the AICF early this afternoon to ask it that question the call went to message bank and has not yet been returned.